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CPA Collaboration

Why CPAs Should Collaborate More Than Ever


CPA firms by necessity have learned much during the pandemic, from offering remote customer services to deploying cloud and other technology solutions, all with the goal of continuously providing their clients with superior service. But there was one lesson from the pandemic greater than all the rest.

Dec 3rd 2021
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For CPAs, perhaps the biggest learning from the pandemic is that collaboration – both with other CPA firms as well as other professions – is a long-term strategy for success.

CPA firms face multiple challenges, including increased national and regional competition and their geographic distribution, which puts a strain on resources. Many firms lack the budget and personnel to field an office in every region, let alone every state.

In many cases, CPA firms are turning to specialization to enhance their prospects of collaboration with firms in other territories.  For example, an accounting firm with expertise serving the oil industry in Texas, is no longer restricted to just those clients in its own backyard. 

With the adoption of virtual work, the firm can leverage its specialty by offering its expertise to other CPA firms throughout the US. The workplace disruption caused by the pandemic changed “usual” working practices for all CPA firms.

Those that survived the initial disruption found they needed to replace their manual processes, paper files, and forms with digital solutions such as cloud-based forms, reports, records and other necessary documents, as well as conduct remote video client meetings, in order to succeed and thrive.

Some went out of business or were absorbed by more successful firms. But all quickly learned that clients now value CPA firms for more than their tax, compliance and reporting abilities.

These firms suddenly found themselves in the role of trusted advisor on various business issues, such as whether or not to renew office leases or even how clients should recruit new employees. Yet even prior to this fundamental shift caused by the pandemic, advisory service firms were exploring the benefits of cross-industry collaboration.

Financial advisors began networking with other financial professionals such as tax attorneys, life insurance practitioners, divorce mediators and others.  CPA firms have always topped the list of organizations that would benefit from a strategic partnership.

We already know that partnerships between financial advisors and CPAs are a natural fit. Both involve an understanding of the flow of money, particularly in the retention of assets against excess taxation. The same can be said for CPAs and law firms, M&A advisors, real estate professionals and more. But what about CPAs collaborating with other CPAs?

By partnering with CPA firms outside their own specialty areas, rising CPA firms can expand geographically, diversify their client portfolios, better manage their business risks and create an environment for future success. Firms that choose this route would still own their existing client relationships while giving themselves the opportunity to deepen these connections by offering a more complete solution through combining their knowledge and resources with that of their collaborative partners.

Clients in turn benefit from having the best firms and the best people at one table.  To help firms increase and improve collaboration, CPAs need to be creative and enlist new out-of-the-box approaches.  Some new best practices that firms are employing to enable collaboration have evolved during the pandemic. Among them:

  • Survey your clients to better understand their actual business needs – and how a collaboration with another firm could help meet these requirements.
  • Don’t only look at eliminating competition. Evaluate any collaboration from the standpoint of value-add services you can offer to your existing clients, such as M&A support, commercial real estate advice, strategic planning and more.
  • Use technology, APIs and cloud-based services to make it easier to share data including master records and client notifications.  This way other firms that you are working with can have complete visibility into client work.
  • Secure testimonials from your existing clients to showcase your strengths to potential partners.
  • Diligently check clients references for any potential partner and proactively reach out to any publicly named clients for references.
  • Join affiliations and associations, such as the local chapters of the American Institute of Certified Public Accountants (AICPA) and the National Association of Personal Financial Advisors (NAPFA). 
  • Try before you buy: Identify a trusted partner and negotiate a trial period to test the cultural and business fit.
  • Manage the relationship. Good communication will give you the basis for an expanded, long-term collaboration.

Collaboration, consolidation and M&A are set to increase significantly among CPA firms in 2022 and beyond. M&A activity for accounting firms has increased steadily throughout 2021 after a pandemic-induced slowdown in 2020, according to comments at the recent AICPA & CIMA ENGAGE 2021 conference.  Emerging specialties including crypto currency require sophisticated accounting expertise and regulatory oversight but also provide tremendous growth opportunities for firms with the right skillset. 

Those with in-demand specialties will be best positioned to both increase their geographical footprints and attract new clients. Whether you are the collaborator or “collaboratee,” make sure to vet those value-add client services to ensure you have the right expertise so that your firm can thrive.